cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Get unlimited expert tax help and powerful accounting in one place. Check out QuickBooks Online + Live Expert Tax.
Rozmore13
Level 4

Service or Inventory Item

My client has subcontractors who perform services on their primary product.  I have attempted to set-up their products and services several different ways and found that the services (even when I put the sales price and purchase price in) will not appear in the cost of goods sold in the books.

 

Creating a prepaid expense and recurring item will not work in this case as the service cost per finished product varies by weight.

 

I hesitate creating inventory items for the services provided if there is an alternative.  I am working in QBO Plus.

 

 

 

 

 

Solved
Best answer March 05, 2023

Best Answers
Rainflurry
Level 14

Service or Inventory Item

@Rozmore13 

 

From both a financial and tax accounting perspective, COGS only applies to items sold that were previously booked as inventory.  You can assign COGS to the expense account of a service product but that books the COGS entry when you purchase it, not when you sell it (which is the purpose of cost of goods sold), which is technically, improper accounting. 

View solution in original post

3 Comments 3
Rainflurry
Level 14

Service or Inventory Item

@Rozmore13 

 

From both a financial and tax accounting perspective, COGS only applies to items sold that were previously booked as inventory.  You can assign COGS to the expense account of a service product but that books the COGS entry when you purchase it, not when you sell it (which is the purpose of cost of goods sold), which is technically, improper accounting. 

Rozmore13
Level 4

Service or Inventory Item

Thanks for the clarity.  I agree.  

 

 

Roz

FritzF
Moderator

Service or Inventory Item

Hello, Rainflurry.

 

I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.

 

Take care and have a great rest of the day.

Get answers fast!
Log in and ask our experts your toughest QuickBooks questions today.

Need to get in touch?

Contact us